Booz Allen Hamilton IPO: Is it useful to consult with companies to make public?

target = "_self"> Booz Allen Hamilton (BAH) beat Wall Street on 17 this month and has raised about 238 million U.S. dollars with its initial public offering (IPO) of shares. Based in Virginia, Booz Allen offers mainly management consulting and technology to the United States government, focusing on defense, intelligence and civil matters (98% of their income for FY10 is derived from the U.S. government.) This target = "_self" OPI> continues the recent trend of private equity firms, firms make purchases public debt in the last two quarters. An increase of 16% in U.S. stocks since late June has helped companies sell shares in PE than a dozen businesses, with 10 operations beyond introductory price, compared with less than half of which went public in the first six months. If BAH, its majority shareholder Carlyle Group (which bought 80% stake in BAH in 2008), diluted almost 10.9% of its stake in the company. In the filing, the company said that a portion of the proceeds will be used to pay the debt of approximately $ 545 200 000 that was added to their books at the time of its leveraged acquisition by Carlyle.

This IPO has reopened a controversial issue: whether it is really worth it for a consulting firm to go seek public money, sacrificing their culture Association for centuries. Is it really worth it considering all the problems of Sarbox reporting and SEC compliance issues for publicly traded? Experts the market have speculated in the past two years (since its acquisition by Carlyle) that the company is obliged to make public at one time or another, the signature of EP leaving no choice really. Because the rules of conflict of interest, Carlyle could not buy the company, which provides advice to government agencies the acquisition of technologies to strategic investors or rivals. But this output, while contributing to Carlyle Group, could have a negative impact on culture single labor and business strategy at Booz Allen, as has been speculated by business columnist Steven Pearlstein in the Washington Online. Carlyle had acquired almost 80% share of BAH for a total outlay of 2.54 million, which included a cash payment of $ 1 billion. But as in the case of most of leveraged buyouts, which has already recovered more than 50% of funds in the form of a special dividend payment by the company in the last fiscal year 500 million euros. The presentation showed that revenues increased 18% to 5120 million during the year, while profit is $ 25,400,000, a margin benefit of 0.5%, which is very low for a consulting firm. This shows the impact of the special dividend. A company with this level of profit is not an attractive for investment in an initial public offering, which resulted in the fact that the majority of the population was at the lower end price range of $ 17 – $ 19 as specified in the document repository. That said, Carlyle has yet to return approximately 100% entry fee $ 17. Also, the spin-off consulting arm Booz Allen, slow-growing private consulting activities and international levels of government has contributed very profitable towards increasing total production of Carlyle.

Therefore, the IPO seems to be an attractive business to Carlyle Group. Remains to be seen if you have target = "_self"> Booz Allen, employees and government customers. BAH has a strong corporate culture that emphasizes partnerships collaboration, quality and the implementation of the client's interests ahead of yours. The continuous growth in sales and profits are organic, the result of a sustained investment of human resources and technology without having to rely on expensive acquisitions and dilution in the culture. Booz Allen CEO Ralph Shrader is particularly emphasized this point in his press conference announced that the message of the culture, the management team or core values remain uncompromising, even after the firm goes public. But skeptics are their concerns. It happened once before in the past Boaz Allen in 1970 when it became public a short time before being deprived again. At that time company executives realized that shareholders expectations and public compliance oppose its unique business model. So who can ensure that history does not repeat it? Once there is a slowdown in public sector procurement, the company could be forced to pursue low-margin contracts or purchase mid-size competitors to meet analysts and investors expect double-digit gains. This could lead to a serious erosion of Booz Allen's work culture and competitive advantages. Lo que sucede en realidad it remains to be seen. Meanwhile, skeptics do not get too excited about this supposedly historic IPO, which could well lead to other companies Consulting in the stock market.

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